Virgin Atlantic, Richard Branson’s airline which has been hammered by the pandemic, is close to finalising a deal to raise just over $230 million from two planes, enabling it to repay a loan taken on as part of its rescue deal last year.
COVID-19 restrictions stopped significant levels of travel on Virgin’s main UK to U.S. routes during 2020, bringing the airline to its knees. To survive the crisis it shed almost half of its 10,000 workforce and underwent a “solvent recapitalisation” last September.
The latest phase of that plan is the sale and leaseback of two planes with Griffin Global Asset Management which a source close to the company said was on schedule to complete this week, and would raise just over $230 million for the airline.
“On closing, this financing opportunity regarding two of our 787s will allow us to pay down debt and further improve our cash position going into 2021,” a Virgin Atlantic spokesman said in a statement.
Most airlines have been forced to cut staff and take on new debts to try to survive the last 10 months when flying has been at historically low levels. EasyJet has also sold off dozens of aircraft under sale and leaseback deals.
During the crisis, Virgin, which is 51% owned by Richard Branson’s Virgin Group and 49% by the U.S.’s Delta Air Lines Inc, has turned to cargo-only flying to boost its finances, with annual revenues in that part of the group up 49% on 2019.
The airline said in its statement on Monday that it was seeing the gradual return of customer demand for travel in 2021, and would fly about 30% of its capacity in January, but could need to take further action financially.
“We continue to explore financing opportunities to strengthen our balance sheet,” the spokesman said.